Posted on 04/17/2007 12:57:39 PM PDT by Chi-townChief
SHANGHAI, China - With models like the Hover and Roewe, Chinese-brand cars aren't household names in the U.S. and other big markets — not yet, at least.
But Chinese upstart automakers with equally obscure names such as Chery, Geely and SAIC are challenging industry leaders like General Motors, Volkswagen and Toyota in the fast-growing China market. And they're making inroads throughout the developing world with an eye toward eventually breaking into big Western markets.
China's homegrown automakers vie for attention with global giants like GM at the April 22-28 Shanghai Auto Show, a biennial event that will showcase China's phenomenal rise to become the world's No. 2 vehicle market.
The tenfold jump in China passenger car sales in the past decade has proved a big boost to General Motors Corp., which has become the market leader in China even as it loses market share at home. GM's sales in China last year rose 32 percent to 876,747 vehicles, while Ford Motor Co.'s jumped 87 percent to 166,722 units.
"Detroit is so cold, but here it's so, so hot," says Yale Zhang, a Shanghai-based auto analyst with CSM Worldwide.
Demand from newly affluent drivers in China lifted passenger car sales by 37 percent last year to 3.8 million units. All told, China's vehicle market — including trucks and buses — grew to 7.2 million last year, putting it second behind the U.S. with 16.5 million autos sold but ahead of Japan, with 5.7 million.
Last year's top-selling model was the Jetta, made by FAW-Volkswagen, one of Volkswagen AG's joint ventures. Even Toyota, a relative latecomer to China, is gaining ground, with a 66 percent jump in first-quarter sales.
China has required foreign automakers to partner with local companies, and the boom has fattened profits for nearly all, says Zhang: "They have money and they have room to maneuver. It's easier now."
Domestic manufacturers are also getting a lift. Sales of small cars have surged after the government phased out urban restrictions last year on sales and use of minicars like Chery's popular QQ and rival Changan Automobile Group's CV6, a similarly egg-shaped minicar with a 1.3 liter engine.
Chery, Changan and others are also ramping up exports, especially to developing countries where low prices count most.
China's automakers exported about 325,000 vehicles last year, about 80 percent of them low-priced trucks and buses bound for markets in Asia, Africa, the Middle East and Latin America.
Chery, based in Wuhu, a city in eastern China's Anhui province, has led the export push for passenger cars, selling 50,000 units overseas last year.
The company assembles vehicles in facilities run with local partners in Iran, Malaysia, Russia, Ukraine, Brazil and Egypt and recently announced it has teamed up with Bognor SA to make bullet-proof sedans in the Uruguayan capital of Montevideo.
But like many other Chinese automakers, Chery has its sights set on bigger targets.
At the Shanghai show, it will show an updated version of the QQ, dubbed the "Chery A1," made in a new partnership with DaimlerChrysler AG. The Chinese side says it expects the alliance to eventually build compact cars for export to North America and Europe.
Little-known overseas, SUV maker Hunan Changfeng Motors Co. put on a display at the North American International Auto Show in Detroit in January, saying it hopes to begin exports to the U.S. within two years.
Rival Great Wall has gained a quirky reputation for its Hover model after shipping 500 of the SUVs to Italy last summer.
Executives at GM, Toyota Motor Corp., and most other big foreign car companies say China may eventually serve as an export base, but for now their big challenge is meeting local demand.
So far, despite limited exports to Australia and Europe, most of the Chinese automakers' grand plans for selling to Western markets have not materialized.
Chery's earlier plans to sell vehicles in the U.S. with American entrepreneur Malcolm Bricklin fell through.
Nanjing Automobile Co. recently launched production of MG model sports car after buying bankrupt British automaker MG Rover in 2005, seeking a foothold in Europe. But its plans to build an auto plant in Ardmore, Oklahoma, appear to have foundered amid a cash crunch.
"We won't necessarily be building it," company president Yu Jianwei said in a recent interview with National Public Radio.
And even in developing markets, it hasn't been all smooth sailing. Geely Group Ltd., China's largest privately owned automaker, saw its plans for auto assembly plants in Malaysia rebuffed last year.
China's domestic automakers are just not ready to meet safety and environmental standards in the U.S. and Europe, let alone to finance the service and sales networks they'd need to break into those already overcrowded markets, analysts say.
"It's still too early to seriously consider China as a competitive rival to Japan and U.S. in the auto sector," says Zhang Xin, an industry analyst at Guotai Jun'an Securities' Beijing office. "They lack the capability to reach those ambitions," he said.
Chinese domestic automakers still lack the scale and efficiency needed to gain a real competitive edge, says John Bonnell, an analyst with automotive research firm J.D. Powers and Associates. He does believe that some have the government backing and resources to eventually succeed, such as GM- and VW-partner Shanghai Automotive Industry Corp., or SAIC, maker of the Rover-inspired Roewe.
"There are lots of ambitions across the board," he says. "But one-by-one you have to look and say, 'Where's the competitive advantage?'"
One example of their relative readiness was evident at the Detroit show, where the electronics in many of the made-in-China cars on display consisted of pictures of DVD players, navigation systems and stereos — taped to the dashboards.
From the Japanese.
Unless Wal Mart decides to start importing and selling low cost Chinese cars.
5-10 years........
LOL—the Chinese won’t have to “grab” market share from the Big 3 . . . they’ll simply hand it over.
“5-10 years”
Yeah, 5-10 years. In 15-20 they’ll dominate the market, just like they’ll dominate everyone else.
I heard it on the news.
An hour later I felt like I had to drive again.
probably poison themselves to death or start a war first...
They could sell those in Cuba so the Cubans can drive from Havana to Miami.
From the Japanese.
I doubt it. Chinese products are generally very inexpensive and of poor quality. They won't be competing with the higher end brands, but rather Detroit and Korea. Japanese branded vehicles aren't cheap anymore. When someone buys one they knowingly pay thousands more for something they believe to be of higher quality than the competition. That's particularly true of Toyota, Honda and Subaru.
People who buy Cherys will be the same people who buy Kia Rio's, Ford Rangers and Dodge Neons.
For now, that's what many Chinese manufactured goods remind me of. I'm confident than in a decade or two, the quality will improve dramatically.
SAIC? LOLOLOLOLOL
LMAO
You can buy one as a collector’s item and park it next to your Yugo.
Kia Rio’s, Ford Rangers and Dodge Neons.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
A Ford Ranger is essentially the same as a Mazda pickup, Rangers ain’t cheap in my book, have you priced one lately?
They've got a base price of just over $13K and my dad bought a shortbed, extended cab, 2wd with a V6 about 2 years ago. After all the incentives he paid just over $12K for it. That's pretty darn cheap in my book. In fact I'm guessing that there isn't a lower priced pickup available in America.
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